SEC delays court action seeking Deloitte China audit papers

WASHINGTON (Reuters) - The Securities and Exchange Commission on Wednesday sought to delay its legal battle with a Chinese unit of accounting firm Deloitte & Touche, citing ongoing negotiations with Chinese regulators.

The SEC has been seeking documents from the Deloitte unit's audits of Longtop Financial Technologies Ltd, but Deloitte has resisted citing Chinese sovereignty laws.

Longtop, a China-based company that was listed in the US, was charged in November with failing to file accurate financial reports.

The SEC said it has reached no agreement yet with the China Securities Regulatory Commission on cross-border cooperation, but talks continue.

The SEC has been investigating dozens of China-based companies listed in the U.S. for accounting irregularities, but those inquiries have stalled amid difficulties in obtaining documents from Chinese auditing firms.

In July 2012, the SEC said, Chairman Mary Schapiro met with the chairman of the CSRC and discussed developing a mechanism for the SEC to obtain audit work papers and other documents from China-based auditors.

"If these negotiations can develop a viable alternative means by which the SEC can obtain the audit workpapers and other documents...it could have a significant impact on the appropriate resolution of this case," the SEC said in its filing.

Deloitte's China unit, Deloitte Touche Tohmatsu CPA Ltd did not object to the delay, the SEC said.

It's unclear how this filing will impact a separate legal action pending against Deloitte in SEC administrative court. That action also seeks work papers in connection with an SEC investigation into an undisclosed company.

(Reporting By Aruna Viswanatha and Sarah N. Lynch; Editing by Gerald E. McCormick and Sofina Mirza-Reid)